The end of the Brexit impasse has prompted a surge in confidence among the South West’s SME manufacturing businesses, according to the latest South West Manufacturing Barometer (SWMB) report.
The previous quarterly study revealed a sector experiencing its toughest quarter in a decade, with more SME manufacturers reporting drops in sales, profits and staff numbers than in any period in the past ten years.
But the latest SWMB, published by business management consultancy SWMAS, highlights a marked uplift in confidence among the region’s manufacturing businesses following the UK’s exit from the EU at the end of January.
Some 42% say they are more confident about their prospects than this time last year, with 24% feeling broadly the same and 34% feeling less confident.
Simon Howes, MD of SWMAS, said there was a feeling that ‘the foot is coming off the brake’ as a clearer picture begins to emerge around Brexit.
He said: “The forecasts for the first six months of 2020 are starting to look much more positive.
“We are not yet at the end of the road regarding Brexit, but it seems that we have at least decided which road we are going to take, so our manufacturers can begin the journey.
“Political certainty appears to have improved clarity, resulting in a (partial) return to confidence in future sales and profits. This, in turn, should lead to more confidence in investing and recruiting.
“This quarter’s special focus looked at the underlying confidence of SME manufacturers to gauge how they are feeling as they plan for 2020 and beyond. The results show that there is still a good deal of uncertainty, with some still feeling downbeat regarding their prospects for the future.
“However, it is encouraging to note that many senior people in manufacturing are now feeling more confident.”
The SWMB also found only 32% of manufacturers in the region have seen an increase in sales over the past six months – a substantial drop on the 51% figure of a year ago.
On a more positive note, 55% of SME manufacturers are predicting sales growth over the coming half-year, which is an increase of 15%.
More firms are also planning to increase in plant and machinery this year, although recruitment plans are broadly on a par with last year.
“The general clamping down on investment and recruitment decisions is finally easing,” said Howes.
“Customers are now coming forward with plans which were previously on hold, but we know too that some sectors are finding it tougher than others.
“We will be working with our manufacturing clients across the region to take a closer look at these differences and to understand the lessons that can be learned going forward in terms of people, products and processes.”